Governor Warner Allocates a Portion of Year-end Revenue for BRAC-related Expenses

Governor Warner Allocates a Portion of Year-end Revenue for BRAC-related Expenses

— $437 million to Rainy Day Fund; $54 million to Water Quality Improvement Fund; $26 million to Transportation Trust Fund; $25 million to BRAC —

Governor Mark R. Warner announced today that he will propose designating $25 million of Virginia's year-end revenue collections to assist Virginia localities affected by the federal Base Realignment and Closure process. This state funding will be used to match local and other funds, and can be used for infrastructure, environmental clean-up, workforce training, and related non-recurring costs for localities that may lose or gain personnel and facilities from the realignment.

"Virginia is committed to supporting America's military, and demonstrating to the Department of Defense that the Commonwealth is an exceptionally attractive and secure place to base its facilities," Governor Warner said. "At the same time, we recognize that changing defense requirements will likely lead to the shifting of personnel and facilities from some areas to others. We plan to use this funding to help affected communities with the transition, and to show the Department of Defense that Virginia remains an active and cooperative partner."

"Virginia has a major stake in the BRAC process," said Delegate Vince Callahan, Chairman of the House of Delegates Appropriations Committee. "Whatever the outcome, the costs of adapting to these changes will be real and substantial. I think the state has an obligation to help localities deal with these costs, and to make sure that Virginia remains a desirable place to locate military installations."

Year-End Results

Preliminary financial results for the fiscal year that ended on June 30th indicate that general fund collections exceeded the official estimate by $544.4 million.

"Virginia's economy continues to outperform the nation, and Virginia's unemployment rate is among the lowest in the nation. That is very good news," Governor Warner said. "This unanticipated revenue will not be used to create new programs. The lion's share will go to the Rainy Day Fund. With the additional $436.5 million deposit that is planned, the Fund will exceed $1.1 billion -- very close to the maximum level set by the Constitution. I am proud that we will leave the next governor with a fully funded reserve. Our commitment to replenishing the Rainy Day Fund is a key factor in keeping Virginia's triple-A bond rating."

"The Virginia Chamber of Commerce believes that we should applaud and celebrate the robustness of the state's economy and the revenues accruing from it," said Jackson Reasor, Chairman of the Board of the Virginia Chamber of Commerce. "While the magnitude of the up-tick in revenues exceeds expectations, it is a problem many states would love to have."

The $544.4 million revenue surplus represents 3.9 percent of the general fund budget for fiscal year 2005. More than three-fourths of the surplus was generated by quarterly non-withholding payments made by individuals who receive substantial amounts of income from stock market gains, bonuses, and other non-wage income; from unusually strong growth in corporate income taxes; and from taxes and fees paid on home and real property sales - the three most unpredictable sources of state revenues.

"As good as this news is, we need to keep in mind that most of the revenue surplus comes from revenue sources that have major ups and downs from year to year," said Senator John C. Chichester, Chairman of the Senate Finance Committee. "Plus, we know that there are funding issues like the impact of the BRAC changes which we will have to address. We need to stay focused on meeting our core needs in education, health care, public safety, transportation, and the environment over the long term. We also have to avoid the temptation of assuming that all problems are solved, that the national economy will roll on without a hiccup, and that we can all go back to business as usual."

BREAK IN TRANSCRIPT

For the year, general fund revenue growth will total about 14.8 percent. According to the National Association of State Budget Officers, 42 states have experienced revenue growth in FY 2005 which exceeded their forecasts.

"The revenue surplus will also allow us to deposit $54.4 million to the Water Quality Improvement Fund, to upgrade wastewater treatment facilities, focusing on those that impact the Chesapeake Bay, and to reduce non-point pollution statewide. With this additional amount, the FY 2006 appropriation for the Water Quality Improvement Fund will total $151.8 million -- more than all previous years' deposits combined," Governor Warner said. State law requires that ten percent of the year-end revenue surplus be designated for the Water Quality Improvement Fund.

"Thanks to the Governor, the General Assembly, and a strong economy, the state has recently made record investments in Virginia's rivers and the Chesapeake Bay," said Ann Jennings, Virginia Executive Director of the Chesapeake Bay Foundation. "The current surplus now makes it possible to appropriate another approximately $50 million investment in the Water Quality Improvement Fund. Although we have a long way to go to restore our rivers and the Bay, this investment provides another significant step toward achieving clean water in Virginia."

Most of the remainder of the revenue surplus is committed to return to the Transportation Trust Fund its share of the accelerated sales tax payments ($26.2 million) which were deposited to the General Fund. With the allocation for BRAC-related costs, all but $2.3 million of this amount is committed, and will be included in the Governor's budget proposal in December.

Earlier this year, Virginia was the only state in the nation to earn straight A's in fiscal management from teams of experts and academics assembled by the Pew Charitable Trust and Governing magazine. The experts cited Governor Warner's leadership in implementing long-range planning and other businesslike reforms enacted throughout state government.
BRAC-Related Funding

Twenty-four military installations in Virginia are currently on the BRAC list to gain or lose facilities and personnel through realignment. Major facilities affected are in:

* Northern Virginia (leased space in Arlington, Alexandria, and Fairfax, Army National Guard Readiness Service Center, Ft. Belvoir, Quantico Marine Corps Base),
* Hampton Roads (Oceana Naval Air Base, Fort Monroe, Fort Story, Langley Air Force Base, Norfolk Naval Shipyard, Norfolk Naval Station, Portsmouth Naval Medical Center, Little Creek Amphibious Base),
* Central Virginia (Defense Supply Center, Ft. Lee); and
* Other Areas (Naval Surface Warfare Center, Dahlgren; and the Naval Weapons Station, Yorktown).

Governor Warner will brief the General Assembly's money committees on the official year-end financial results on August 29, 2005, in House Room D of the General Assembly Building.

http://www.governor.virginia.gov/Press_Policy/Releases/2005/Jul05/0721.htm